Surging Stock Market and Appreciation of NT Dollar Definitely Not Good News

 Surging Stock Market and Appreciation of NT Dollar Definitely Not Good News

 China Times Editorial (Taipei, Taiwan, ROC)

February 8, 2017

 Translation of an Except

The Taiwan dollar has appreciated against the US dollar, and the stock market has also seen a continual surge, rising further with a massive influx of foreign capital following the Chinese New Year’s holidays. At one point the Taiwan dollar even broke the NT$ 31 to US$ 1 point, with the TAIEX weighted index climbing past 9,500 points. The housing market, which was in the doldrums, has also seen the first swallow of the new year. Under normal circumstances, strong showings in both the stock market and exchange rates indicate a better economic performance and higher corporate profits. The resuscitated housing market would also help economic growth. All of this is something worthy of applause. However, under the current politico-economic situation, better performance in the stock market and exchange rates, on the contrary, could cause harm to Taiwan's economy. The government must treat the matter with an attitude of walking on thin ice, and it should cautiously formulate a long-term policy in coping with the situation.

In the better performance of the stock market and exchange rates this time, the most important cause was the massive influx of foreign capital. The massive influx of foreign capital into Taiwan does not indicate that there are facets that are especially worthy of applause and expectations in the fundamentals of Taiwan’s economy. Rather it is the result of the implementation of the popularly-called "global fat cat clause" and the implementation of joint international pursuit of tax evasion. For the fat cat clause, over 100 countries have joined, including the United States, Mainland China, Singapore and Hong Kong, with implementation estimated to take place next year. Taiwan has remained in the law-amending stage, making Taiwan a temporary haven for foreign capital escaping the fat cat clause. If the government cannot cope with the situation at the policy level, when the hot money takes flight, it will be another disaster of setbacks for the stock market and exchange rates.

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